EXHIBIT 10.4.2
FIRST AMENDMENT TO EMPLOYMENT AGREEMENT
This is the first amendment to the Employment Agreement dated on or
about March 9, 1998, by and between American Home Mortgage Corp. and Xxxxx
X'Xxxxxx (the "Employment Agreement") and is made on February 1, 2001.
1 The defined terms set forth in the Employment Agreement shall be
given their same meaning in this amendment
2 Section 5, subsection (c) of the Employment Agreement is omitted in
its entirety and replaced with the following:
A portion of the profit from secondary market activities, secondary
market activities being defined as the aggregate difference for all
loans sold during a month, between the price the Company receives for
a loan and the price the company would have received for the loan had
it sold the loan to the best efforts investor offering the highest
price for the loan, that resulting total plus or minus the gain or
less from hedging activities allocated to the month. For the purpose
of this subsection, best efforts investors shall be limited to those
investors to which the company has sold loans, and the twenty largest
buyers of whole mortgage loans in the United States based on league
tables for the previous year. For the purposes of this subsection,
highest price shall be based on the lock-in period granted a
customer. For the purposes of this subsection, hedging activities
shall include pairing-out of unfulfilled forward sales contracts and
options trading.
The portion of the profit that shall be paid as a monthly bonus is
as follows:
Profit from Secondary Marketing Activities Portion (percentage) that shall be
paid to the Executive as bonus
First $100,000 of monthly profit........................ 10%
Next $150,000 of monthly profit......................... 9%
Next $300,000 of monthly profit......................... 5%
Next $500,000 of monthly profit......................... 3%
Profits exceeding $1,050,000 per month.................. 2%
If there is a loss from secondary marketing activity during a given
month, such loss will be offset against profits in the subsequent
month, or if necessary months, until the amount of the loss is fully
offset. In a month for which a profit is being offset by a previous
loss, the profit from secondary marketing activities upon which the
bonus is calculated will be the amount of profit for the month less
the amount of the loss being offset.
Bonuses due to the Executive pursuant to this Section shall be
calculated by the company and paid to the Executive no later than
thirty days after the close of a month. If the Executive disagrees
with the amount paid for a given month, he will notify the Company
within ten days. Absent such notification, the amount paid shall be
deemed correct.
The Executive agrees that his first responsibility is to protect the
company from interest rate risk, and that he will not engage in
practices that expose the company to material losses due to a change
in interest rates. The Executive agrees that profits from secondary
marketing activity will be earned by 1) selling loans on a mandatory
basis and hedging the resulting interest rate risk, 2) selling loans
in bulk, 3) negotiating favorable sale terms with investors, 4)
taking advantage of opportunities due to investors continuing to
offer a set price as the market changes, and 5) other opportunities
that do not create material interest rate risk.
3 The amount due and unpaid the Executive as of this date is $150,000,
and no additional amount for past services or previous periods is
due.
4 All other terms of the Employment Agreement remain unchanged.
IN WITNESS WHEREOF, the parties hereto have caused this amendment to be
duly executed on February 1, 2001.
American Home Mortgage Corp.
By: /s/ Xxxxxxx Xxxxxxx
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Name: Xxxxxxx Xxxxxxx
Title: President
/s/ Xxxxx X'Xxxxxx
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Xxxxx X'Xxxxxx
